When the client creates the product

Usually a company starts with a product to build their business on. For Quebec-based telecommunications company and BUSINESS without BORDERS member TelcoBridges, their first client thought of a product and asked them to deliver.

The six founders had left their telecom jobs in 2002, around the time when the telecom bubble burst. Every Friday, they’d meet for a pizza lunch in CEO Gaetan Campeau’s basement and brainstorm with flipcharts about how they could breathe life into a dead industry.

They decided to send out a survey to companies they had done business with in Asia, Europe and the U.S. A contact in Hong Kong got back to them proposing they create hardware that could handle 2,000 phone calls at a time, compared with the industry standard of 500.

They delivered, and were soon doing business with some of the biggest carriers in Asia. Director of product marketing Kenneth Trueman, says that kind of success would have been impossible in North America’s telecom industry.

He explains that at the time in Asia, the cell phone industry was exploding, and since most people didn’t have land lines, there weren’t big companies that held monopolies on the business. Service providers were anxious to partner with software developers to lure customers with fancy features like ring backs, an extremely popular technology in Asia where the caller can customize the type of ring the person they’re calling hears. That’s where TelcoBridges came in: they’d provide the hardware that software developers could build on and then sell to service providers and the more calls the hardware could handle, the less coding they had to do.

In North America there was a “walled garden”, meaning a few companies: AT&T, Bell and Telus, had control of the software development industry and would contract the features they wanted to certain companies. There was no room for third-party software developers with creative ideas.

“It was their way or the highway,” says Trueman. “Many telecom start-ups said we can either bleed to death slowly trying to work with these companies or go something else.”

For the first couple years, TelcoBridges did two thirds of their business in Asia, and it still makes up 50% of their clients. The company started doing North American business in 2007, around the time when it became possible to download applications and ringtones from the Internet for cheaper than what phone carriers were offering. This opened the market to third-party developers.

Still Canadian clients only makes up 1-2% of TelcoBridge’s business and the U.S. market just 5-6%. Another quarter comes from Latin America and the rest is split between Europe, the Middle East, and Africa. In addition to Quebec, Telco has employees in Paris, Singapore and Silicon Valley as well as an office in Hong Kong with four staff.

Trueman says it’s important to keep the long term in mind when doing business overseas. Though the average service provider in India or China makes $5-6 a month from each client, compared with Rogers or Telus that average $60 per month, there is the potential to grow with Asian companies. “We have to be aware of the context and growth rates of each country,” says Trueman. “We bite the bullet short term because there is long-term potential.”

He says picking international partners that have the same vision as your own is extremely important. “You can’t stop partners from deciding to sacrifice margin in the short time to score businesses,” he says. “Picking the right people and tending them like you would with a garden, adding resources when necessary and culling back when things aren’t working out.”